Top 9 Miscues to Dodge When Buying a House

There are many factors that can affect your standing with a mortgage lender when you are in the process of buying a house and above all you do not want to give them any reason to think twice about funding your loan.

Averting red flags may seem like common sense but some situations are not as obvious and can affect you more than others. A few characteristics that will go a long way in demonstrating you are a qualified borrower to your lender are proof of:

• job stability
• financial responsibility
• a low debt-to-income ratio

To help you demonstrate these aspects we compiled a list of 9 things we recommend you avoid during the home buying process.

9 things to avoid when buying a house

1. Do not quit your job

This includes retiring or becoming self-employed. You were pre-qualified by your lender based on your job with your current employer, any change to that standing can affect your loan.

2. Do not change banks/bank accounts

You want your bank history to show stability, switching banks or transferring money from one account to another can send the wrong signal to a mortgage loan officer.

3. Do not buy anything you have to finance before buying your home

This includes furniture, appliances, vehicles or any other form of transportation barring you are paying cash for the transaction. Financing any of these big ticket items can increase your debt-to-income ratio.

4. Do not be late on your credit card payments or charge excessively

Being late on your credit card payments can lower your credit score which might affect your standing with your lender. You need a track record of financial responsibility to show you can manage your money.

5. Do not make large deposits into your bank accounts you cannot explain

Mortgage lenders like your down payment funds to be in your bank account for at least 2 months. When money seems to appear out of nowhere you can run the risk of a lender second guessing your financial standing.

6. Do not use cash for your earnest money deposit

For your earnest money deposit use a check so you have a paper trail, you want to be able to track everything if need be. Furthermore, make sure you are issuing your earnest payment to a reputable third party.

7. Do not co-sign on a loan for anyone

Even if you are not the one making the payments on the loan you are a responsible party on the loan and it can increase your debt-to-income ratio.

8. Do not have inquiries made into your credit

Looking for new credit translates into higher risk for lenders because it appears you are bringing on more debt. However, if your inquiries are related to your mortgage search it usually does not affect your credit score because the assumption is you are rate shopping.

9. Do not exaggerate on your application

Use common sense. Things like leaving out your debts or inflating your income will affect your ability to even qualify for a loan, and if you cannot qualify for a loan you will never be able to buy a house.

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